Association of Chartered Certified Accountants (ACCA) Certification Practice Test

How can economic growth be measured?

1. By assessing national debt levels

2. Through real gross national product (GNP) per capita

3. By evaluating unemployment rates

4. Through changes in government policies

The correct answer is: Through real gross national product (GNP) per capita

Measuring economic growth is often best achieved through real gross national product (GNP) per capita because it offers a clear indication of the economic output relative to the population size, allowing for a better comparison over time or between different countries. Real GNP adjusts for inflation, providing a more accurate depiction of an economy's actual growth, and using per capita figures gives insight into the average economic well-being of individuals within that economy. This measure allows policymakers and analysts to assess whether the economic growth is translating into improved living standards for the population. By considering per capita values, it provides a perspective on whether growth is inclusive and benefits a larger share of the population, rather than reflecting only aggregate figures that might mask disparities. While assessing national debt levels, evaluating unemployment rates, and examining changes in government policies can provide insights into an economy’s health and functionality, they do not directly quantify growth in the same manner that real GNP per capita does. National debt levels can indicate fiscal stability, unemployment rates reveal labor market conditions, and government policies may signal future economic direction, but they do not measure the overall production and consumption output of the economy directly.